Acalin and Ball simulate that without primary surpluses, surprise inflation, and the pre‑1951 interest‑rate peg, U.S. debt/GDP would have fallen only to 74% by 1974 instead of 23%, and would sit at 84% in 2022. This implies postwar debt reduction came mainly from financial repression and inflation eroding real liabilities, not from growth alone beating undistorted interest rates.
— It undercuts the idea that America can simply 'grow out' of today’s debt, pointing instead to politically costly surpluses or inflation/interest‑rate suppression—each with deep distributional and institutional tradeoffs.
msmash
2025.10.16
62% relevant
The IMF warning that debt will reach post‑war highs (comparable to 1948) connects to the historical point that post‑WWII debt was reduced largely via inflation and rate pegs; today’s lack of appetite for fiscal tightening and rising yields raises the question of whether governments will again rely on inflation/financial repression rather than surpluses.
Allen Mendenhall
2025.09.22
45% relevant
Both pieces contend that inflation/monetary policy has society‑scale consequences beyond immediate prices; the prior shows fiscal balance effects from inflation and pegged rates, while this review argues inflation imposes hidden social costs by weakening family formation.
Arnold Kling
2025.08.25
84% relevant
Kling reprises Acalin & Ball and adds that measuring primary surpluses and the Johnson-era 'unified budget' (folding Social Security) clarify how the debt/GDP ratio fell in the 1950–60s, sharpening the mechanism behind postwar debt reduction.
Tyler Cowen
2025.08.24
100% relevant
Tyler Cowen cites Acalin & Ball’s paper quantifying counterfactual debt paths absent surprise inflation and the Fed‑Treasury peg.
Curtis Yarvin
2025.08.03
45% relevant
This article proposes eliminating rate pegs/targets in favor of a free market yield curve, directly engaging the question of how interest‑rate regimes shape sovereign debt dynamics that earlier work attributes to pegs and financial repression.